A second pharmaceutical giant is suing the federal government over 340B program change denials this week.
Lilly filed a lawsuit Nov. 14 against HHS head Xavier Becerra and the Health Resources and Services Administration for blocking a plan to change its 340B program from immediate discounts to offering rebates after the hospital pays in full.
Johnson & Johnson filed a similar lawsuit Nov. 12 after HRSA attempted to halt its plans to similarly end its 340B discounts program in favor of issuing rebates.
Five things to know:
1. HRSA denied Lilly's request to revise the 340B program's methods for paying hospitals. It said Lilly's plan was inconsistent with legal requirements but hasn't commented further, according to The Wall Street Journal. Lilly said HRSA rejected the plan without reason or process.
2. Lilly issued a statement arguing the new model does meet the 340B program's original goals and improved the program overall.
3. Under Lilly's proposed new plan, 340B hospitals would pay full price for drugs and then get a cash rebate from Lilly every week instead of discount prices. The rebates would be delivered through its technology partner, Kalderos, instead of a "product replenishment" model designed for for-profit pharmacies, third party administrators and large hospitals.
4. Lilly aims to stop hospitals from billing Medicaid for drugs at the 340B prices. The company sees a high potential for abuse in the current program design.
"This model offers faster payments, improves cash flow for covered entities, and increases transparency. And it aims to prevent abuses seen in the current program, ensuring compliance with existing laws and new requirements under the Inflation Reduction Act," reads the statement.
5. The new model would ensure hospitals didn't pay more than the 340B ceiling price.